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Green Growth Concepts and Definitions Working Paper October Green Growth Concepts and Definitions Working Paper October 2014 Component 1B: Green Growth Tools Government of Indonesia - GGGI Green Growth Program July 2014 1. Introduction The Indonesia Green Growth Program was launched in June 2013 with the overarching objective of mainstreaming green growth planning into the country’s key economic and development planning processes. The Government of Indonesia (GoI) recognizes the green growth opportunities for the country and the potential for sustainable economic growth, job creation and poverty reduction. What is required to achieve these opportunities is a systematic approach with concrete steps that moves the country from where it is now to where it needs to be to achieve its vision for sustainable economic prosperity. Green growth represents these concrete steps and is an important part of the process that will help deliver sustainable development for Indonesia through focusing on the role of natural capital as a driver of economic growth. GoI is aware that the green growth concept must be developed and applied to support development that is pro-growth, pro-poor, pro-jobs and pro-environment. In achieving these overarching objectives is the need to mainstream green growth planning into the country’s key economic and development planning processes. However, this mainstreaming process needs to be underpinned by a clear and shared understanding of what green growth is; of a vision for green growth in Indonesia; and of the conceptual and analytical framework for assessing and measuring what green growth means for the country. These key related issues are discussed through two separate technical papers as follows: Green Growth Concepts and Definitions Paper: which articulates Indonesia’s vision for green growth in the context of a number of internationally recognised concepts related to green growth, identifies the priority focus areas for Indonesia; and articulates an agreed green growth vision statement for Indonesia; Green Growth Scoping Paper: which provides a working definition of green growth and outlines the analytical framework for assessing green growth within an Indonesian context based on stakeholder input, proposes a suite of priority indicators for planning and measuring the country’s green growth performance, and identifies relevant tools and methodologies to support mainstreaming green growth in development planning. This document - the Green Growth Concepts and Definitions Paper - should be read alongside the Green Growth Scoping Paper. The overarching objective of this paper is to set out a clear vision of what green growth can achieve for Indonesia. The vision should provide a unifying framework for stakeholders to understand what green growth means for Indonesia, what the benefits of green growth are, and what that the country can aspire to become in ways that stakeholders can rally around. More specifically, this Green Growth Vision Paper has four objectives: Summarise the different working definitions of green growth and provide examples of other countries pursuing a green growth strategy; Identify the implications of current development trends and outline the potential benefits achieved through Indonesia shifting to a green growth pathway; Summarise the specific green growth priorities for green growth in Indonesia drawn from consultations with stakeholders; and Present a simple, clear green growth vision for Indonesia that can be nationally owned. 2 2. What is Green Growth? “The Government of Indonesia understands the opportunities which a green economy and its potential for sustainable economic growth, job creation and poverty reduction can bring to Indonesia. What is required to advance green growth in Indonesia is a systematic approach with concrete steps that take us from where we are today to our vision for a green economy.” Dr Lukita Tuwo, October 2013 The concept of green growth Green growth is a paradigm in which green policies, innovation, and investments drive sustainable economic development. More broadly, green growth is an approach for achieving a number of simultaneous objectives bringing Indonesia closer to achieving true sustainable development: through avoiding and curbing greenhouse gas emissions, building resilience to climate extremes and longer term change, using resources more efficiently, providing sustainable and equitably-distributed increases in GDP and standards of living, and valuing the often economically invisible natural assets that have underpinned economic success over the centuries. The model of green growth that is right for Indonesia is still evolving, but it is the experience of countries testing what works, and what doesn’t, that will help shape this model. The concept of green growth in Indonesia has been informed by the views of leading international organizations involved in green growth planning and development. There have been a number of recent publications on green economy and green growth that have offered a perspective on its characteristics and a working definition of green growth, including leading international organizations such as United Nations Environment Program (UNEP), The United Nations Department of Economic and Social Affairs (UNDESA), the United Nations Conference on Trade and Development (UNCTAD), United Nations Social Commission for Asia and the Pacific (UNESCAP), the International Labour Organization (ILO), the World Bank, the Organization for Economic Cooperation and Development (OECD), The Global Green Growth Institute (GGGI), the Green Economy Coalition, the Green Growth Leaders, and the Green Growth Knowledge Platform (GGKP). There is also emerging practice in the design and implementation of national level green economy and green growth strategies in both developed and developing countries. However, whilst there is no one, internationally accepted working definition of green growth, this international experience provides important insights and helpful clarity in informing stakeholders about a green growth vision for Indonesia. Also, it is worth mentioning that the concepts of green economy and green growth, and low carbon development to a lesser extent, are often used interchangeably by international organizations. In the context of the Indonesia program our primary focus is on green growth which has a narrower focus than sustainable development, and emphasizes the role that natural capital can play in driving sustainable economic growth. However, Huberty et al (2011) provides a review of different international approaches to green growth and identifies a distinction between weak, moderate and strong versions of green growth. In particular different countries have adopted alternative approaches that emphasize weak, moderate or strong versions of green growth as follows: Weak green growth: growth is seen as compatible with emissions reductions and environmental safeguards but a “do no harm” approach is adopted. Under this version economic growth is consistent with avoiding environmental damage and there are benefits identified from focusing on natural capital as a growth driver (eg: cost savings from natural resource efficiency) Moderate green growth: a more ambitious version sees green growth as a way of boosting jobs in new green sectors. Under this version investments in low carbon technology and infrastructure can create new employment opportunities (green jobs) in new green industries, which has been 3 particularly attractive in developed economies in need of kick starting growth in depressed economies. Strong green growth: under this version of green growth, green investment goes beyond job creation and can be seen as a transformative force across the whole economy over the mid to long term. The decarbonisation of the economy can become a growth engine for the whole economy through the effects of widespread technology investments and productivity improvements across all economic sectors. How natural capital drives growth The drivers of green growth, or the green growth “theory of change”, can be summarized in terms of an integrated approach to sustainable economic prosperity that typically is characterized by: Increases in the quality and quantity of natural resources and environmental services; as these are factors of production their availability is critical to higher long run economic growth; Increases in the productivity of resources; as higher growth can be generated by fewer resources; Increases in investment in new technology and innovative applications of existing technologies; as economic growth has historically always been driven by technological change; Removing market failures in the pursuit of economic, social and environmental goals; as economic growth is catalyzed by more efficient allocation of resources. This green growth theory of change can also be illustrated through a green growth value chain which emphasizes the way in which natural capital catalyzes sustained economic growth through the generation of resources commodities and resource amenities (Krautkraemer 2005): Resource commodities are those natural resources directly used in the production of goods and services; these may include non-renewable resources, such minerals, but also renewable ones, such as wood; their exploitation is governed by the law of demand and supply with a price signaling their relative scarcity; however, this may not reflect all social costs and benefits associated with their exploitation. Ecosystem services or resource amenities include those natural resources that are
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